The SIIF Energies windmill farm in Cabril, Portugal. Portugal was once a rising renewable energy star in the European Union, but the sector slowed significantly after the country rolled back subsidies in 2012 | Miguel Riopa/AFP via Getty Images

Portugal’s clean-power problem

Lisbon was once a renewable energy champion, but now it has fallen off the map.

Energy generated by Portugal’s abundant wind, water and sunshine could fuel the country’s much-needed economic recovery — if the government becomes more enthused about tying its energy market to the rest of the world.

Portugal’s Socialist government isn’t doing much to foster investment, critics say, as it scales back subsidies, and plans to build a power link from the Iberian Peninsula to France sputter. The French connection in particular was a priority for the previous Social Democratic administration, which was replaced last November.

"There’s a whole renewable discussion to be done and Portugal is nowhere to be seen" — EU source

So far Socialist Prime Minister António Costa has done little to lobby on his country’s behalf, according to an EU source familiar with Portugal’s energy sector and policies.

“Portugal went from being a small country that was really ambitious and fantastic in renewables — with policy proposals that the Germans were calling ‘the Portuguese option’ — to being a desert,” said the source, who asked not to be named. “There’s a whole renewable discussion to be done and Portugal is nowhere to be seen.”

Lisbon agreed in 2012 to roll back generous investment perks to the renewables industry as part of a broad bailout plan to cut spending and keep the country out of bankruptcy. Portugal's then-burgeoning renewable sector took a hit. Now it risks facing penalties as other EU countries race to meet their binding targets for adding renewable energy by 2020.

Portugal is now a dead market for an industry eager to piggyback on the EU’s targets to boost renewable energy generation.

“They are killing the business,” António Sá da Costa, managing director of the Portuguese renewable energy association APREN, said of the austerity measures. “Portugal, sooner or later, will come to a stall.”

Hydro, wind, solar and other renewables produced an average 52 percent of Portugal’s electricity as of 2015, which is just 8 percentage points shy of the country’s target of 60 percent by 2020. Renewables also accounted for 25 percent of Portugal’s total energy use (including transport, heating and cooling) — the goal is 31 percent.

Despite its strong start, the changed incentives mean Portugal may fall short of its 2020 targets, warned Sá da Costa. “Maybe, on this track, we can reach a 54-55 percent share of renewable electricity by 2020,” he said.

The government says it continues to support investment in renewable energy by focusing on emerging technologies, such as concentrated solar and photovoltaic or wave energy.

Even after the end of some subsidies, "there is interest on investments in solar projects in Portugal," the economy ministry said.

Not everyone is as critical of the government’s decision to gradually end renewable energy subsidies and expose the projects to the free market. Mature technologies such as onshore wind need to be able to stand on their own. Onshore wind received €628 million out of the €978 million in incentives in 2013, according to the International Energy Agency.

The broader Portugal 2020 plan Lisbon and Brussels agreed on to stimulate jobs and economic development, in exchange for €25 billion from the EU, includes €130 million in funding for new types of renewable energy. Under the program, the government announced a competition in late July for €25 million in funding for emerging technologies.

“We have to separate the mature renewable technologies such as wind energy, which is no longer in need of public support because it is already financed by the market,” Secretary of State for Energy Jorge Seguro Sanches said in June. “We must have support for the test phase of pilot projects.”

In another show of support, the government is looking into an underwater power line to Morocco and the two governments agreed in June to spend €400 million on a feasibility study. The Commission is happy for EU states to link up with countries outside the bloc, but says connections between members remains the priority.

Stranded Portuguese

Without interconnectors, Portugal remains an energy island tied only to Spain.

“Imagine a BMW factory in Germany that produces a lot of very nice, very good cars, but then doesn’t have the roads it needs to sell the cars to other countries,” Sá da Costa said. “It’s a bottleneck.”

Portugal, Spain, and the European Commission have long pushed the French link as an integral part of the EU’s energy union.

That means the generation of renewable energy is restricted by what Portugal and the small interconnectors to Spain can handle. Too much rain, wind or sun causes a surge in power output that drags down prices and overloads the grid; not enough causes price spikes and supply shortages.

The favorite option has been in talks for years: a line across the Pyrenees into France, which is already connected to the U.K., Belgium, Germany, Switzerland, Italy and Spain. Another plan, calling for a cable from Portugal under the Bay of Biscay to Britain, would be too expensive.

Portugal, Spain, and the European Commission have long pushed the French link as an integral part of the EU’s energy union.

France is more cautious, pointing to the high cost and construction challenges — an argument that echoes its position on a proposed gas pipeline from Spain to France. Portugal and Spain say France’s resistance is more about protecting its fleet of 58 nuclear power stations from renewable energy competition.

"The lack of interconnection capacity is just between France and Spain, which is clearly insufficient given the capacity of the Iberian Peninsula to provide renewable electricity to Europe," the Portuguese ministry said, noting delays and "small steps," despite commitments from Portugal, Spain and the Commission.

Lisbon strong-armed Paris into agreeing on the need for more cross-border interconnectors in 2014, in the run up to last year’s COP21 Paris climate summit. Portugal threatened to veto the EU’s climate and energy targets for 2030 unless countries agreed to also set a goal for connecting national electricity grids.

“Portugal said ‘We are not Poland, because we actually want the 2030 goals to be achieved,’” the EU source said. “Because without the 2030 goals, France could not have a successful COP21.”

The blackmail worked — for a time. The EU set a goal of linking 10 percent of its electricity production capacity across national borders by 2020, and France, Portugal and Spain agreed to look into the power line project, as well as the gas pipeline.

But momentum has since stalled, and time is running out to build the line by 2020.

“Energy is not the Portuguese government’s main concern nowadays,” Sá da Costa said. “I hope the European Commission will help. But are my hopes nowadays very high? No they are not.”

This article has been corrected to note that the comment about renewable technologies was made by Secretary of State for Energy Jorge Seguro Sanches, not Secretary of State for Environment and Energy Jorge Moreira da Silva.

Latimer Alder

Translation – ‘without the bribes and subsidies our lives as rich, fat parasites and leeches is at risk! Oink, oink!’

Posted on 8/29/16 | 7:56 AM CET

Green giant

Renewables can only exist with massive public subsidy, they are no way as “green” as made out. You have to factor in the staggering non “green” productions and future maintenance costs. There is nothing “green” about renewables if you factor in every stage of the design and production costs through to end of life with a lifetime of maintenance.

Posted on 8/29/16 | 2:14 PM CET

João Vasconcelos

@Greengiant. As opposed to what…nuclear power plants? Offshore oil platforms?

Posted on 8/29/16 | 2:43 PM CET

Observer

Green energy is just one big expensive fraud which we EU citizens are paying for mostly to the German companies.

Posted on 8/29/16 | 5:07 PM CET

Nuno

This is just more evidence that the EU project is not in the best interest of smaller countries. France will always be France. It can break all rules, dealings and do as it wishes to the economic prejudice of their neighbours. Meanwhile, smaller countries are bullied and made to agree every dictat.

Posted on 8/29/16 | 7:11 PM CET

CO

Blaming the current government for the decrease of investment in renewables simply shows that the author of the article is misinformed and has not done a proper verification of facts). The end of the investment incentives for renewables was a did of the former government as part of the austerity package dictated by the bailout. Regarding the interconnection with Europe – how can Portugal be blamed by the fierce resistance of France to open its borders to the energy imports from Portugal and Spain? Have you heard about any initiative from the European Commission to recall France of its commitments and enforce them? They were simply too busy with the sanctions for excessive deficit for Portugal and Spain.
Actually the excess of production of renewable energy has resulted in the paradox of having wind-based electricity being sold to Spain at zero cost but actually paid by the Portuguese consumer through the subsidies to renewables.
I would expect from Politico journalists better informed and factually accurate articles instead of being an echo chamber of political minded attacks and interest groups.

Posted on 8/30/16 | 10:28 AM CET

Sócrates Vicente

So how would all this work in a country trying to reduce its budget deficit (maybe even its debt)?

Is the EU going to dole out for even more investment in this area or are people supposed to pay more taxes and consume less?

It’s not like the investment in Portugal in this area has stopped… And when the previous Socialist Party government was heavily investing in renewables, the same the allowed Portugal to run for several days on solely on them this year, a lot of the economy gods were bashing them for doing so.

Posted on 8/30/16 | 7:21 PM CET

PG

Portuguese politicians are among some of the most corrupt , incompetent and unaccountable in Europe and have proved this decade after decade .
Their decisions and actions concerning renewable energy are the latest example of mismanagement and incompetence .
One day there will be payback time , and these politicians and political parties will pay the price and disappear , and probably be convicted in court for the mess they have created .

Posted on 10/28/16 | 1:41 PM CET

PG

Without using renewable energy Portugal will never stay a developed country , and will have to live on EU subsidies . Naturally there is massive investment needed for renewable energy , and the maintenance costs are similar to classic energy sources , but without efforts in Portugal and the rest of the world large coastal regions of Portugal will go under water as sea levels rise , then what will the country do ? Add to this the changing climate , and Portugal could have massive problems of food and water

Posted on 10/28/16 | 1:46 PM CET

PG

Almost all politicians in Portugal are technologicaly illiterate , and are totally unaccountable for their decisions and actions and this is unacceptable . Portuguese politicians in the EU and UN have shown that they are incompetent and unaccountable and good for nothing except talking .
Portugal will never develop until all the unnecessary legislation concerning business creation etc has been simplified , and local government forced into efficiency and accountability .
Without renewable energy and EU subsidies , Portugal will never recover and Portugal , Greece and a few other countries will be forced out of the EUrozone

Posted on 4/27/17 | 2:04 PM CET

PG

This all proves that the EU is incapable of making governments respect legislation and punishing the politicians severely when they do not . The EU like Portuguese politicians is all talk and no action , and just wanting good salaries and pensions for themselves .

Posted on 5/10/17 | 1:37 PM CET

PG

The Portuguese government seems to do nothing , it has stopped investment in Solar , it has not changed legislation to make it easier to create and shutdown companies , it still taxes EU car imports and pays fines to the EU , and then says the economy is OK . What rubbish , even the young have abandoned the country and will probably not come back so where is the future . Even asylum seekers and refugees do not want to come to Portugal , yet the government lives in isolation and incompetence .

Posted on 6/9/17 | 2:42 PM CET

PG

As usual the Portuguese government withdraws from necessary ideas . They do not make enough money from renewable energy in Portugal , they want to sell it to the rest of Europe , but don’t want to create jobs and have new businesses in Portugal , that means they have to work , and they are not renowned for that .
There is still too much corruption at the top in Portugal via political and business connections , this has to be investigated and politicians severely punished

Posted on 6/21/17 | 2:04 PM CET

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A year-long series examining the politics and issues driving today's energy and climate conversation in Europe.